Cyber Sessions: The dollars and sense of a data breach

Editor’s note: This is the 16th installment of a monthly column on the growing number of cyberthreats facing businesses of all sizes and what they can do about it. See previous installments here.

Cyber resilience in today’s digital economy is one of the most important and proactive measures that a business can take to protect itself. And when it comes to mitigating cyber risk, knowledge is power.

Every year, IBM releases the “Cost of a Data Breach” report, and this year we find a treasure trove of insights. These findings not only shine a light on the evolving cyberthreats but also offer us a map to help navigate these complex times.

The report, released in July, highlights some fascinating revelations about the financial risk of data breaches in 2023. Data breach costs have surged to an average of $4.45 million per incident, according to IBM – a 2.3% increase from 2022 and a staggering 15.3% increase from the $3.86 million average in 2020. One alarming statistic is that only 1 in 3 companies discovered a data breach themselves, as opposed to 67% of breaches being reported by a third party or by the attackers. This shows that organizations need to enhance their internal monitoring and detection capabilities to stay ahead of the ever-evolving threat landscape.

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One of the most significant game-changers in the fight against breaches is the deployment of artificial intelligence. The report highlights the impact of AI in reducing both the time to detect threats and the time to contain breaches. Shortening either of these timelines can lead to substantial cost savings.

The report says the use of security AI and automation resulted in a reduction of time to breach detection and containment by an average of 108 days, leading to nearly $2 million in cost reduction. Even the limited use of AI shortened the response time by 88 days, on average.

“AI-driven data security and identity solutions can help drive a proactive security posture by identifying high-risk transactions, protecting them with minimal user friction and stitching together suspicious behaviors more effectively,” the report states.

Another revelation from the report is the effectiveness of ransomware playbooks and workflows. Having well-defined playbooks on how to respond to ransomware attacks can significantly reduce response times and minimize costs. That being said, this best practice isn’t limited to ransomware. It extends to overall incident response planning. Organizations with mature response programs are significantly more prepared to identify and respond to an incident efficiently and effectively. These programs typically involve having an identified team, maintaining a written plan and practicing that plan regularly. These measures can make a big difference when it comes to mitigating data breach costs.

Also noteworthy is the discrepancy between smaller and larger organizations when it comes to data breach costs. Smaller organizations faced considerable cost increases, while larger organizations experienced declines. The data shows that smaller organizations – businesses with fewer than 500 employees – all experienced double-digit percent increases. It is challenging to identify the reasons, but it may be that smaller organizations are less likely to invest in activities that can minimize data breach costs. Also, smaller organizations might have a false sense that they are less attractive targets for cybercriminals, which could lead to complacency. It’s crucial for smaller entities to realize that every organization is a potential target.

The top four factors that appear to drive down data breach costs include integrated security testing, human risk management – or employee awareness – incident response planning/testing and leveraging artificial intelligence.

Meanwhile, factors that tend to increase costs include a remote workforce and third-party risks, noncompliance with regulations, and the complexity of the cybersecurity tools in use. These valuable insights highlight the importance of adopting proactive, risk-centric measures and robust cybersecurity practices to mitigate data breach costs.

Business leaders must take these critical insights seriously to safeguard their sensitive data. Only by focusing on cybersecurity risk mitigation strategies can businesses effectively lessen the financial impact of cyberattacks.

Next month: How a proactive “cyber ready” board of directors makes for a more resilient company.

Jason Albuquerque is the chief operating officer of Pawtucket-based Envision Technology Advisors LLC. You can reach him at www.envisionsuccess.net.